Consolidations, Closings, and the US Postal Service

The Nat King Cole Post Office in Los Angeles is for sale for $8.3 million.

This is not a good time to consider embarking on a career as a letter carrier‚ especially not for someone living in a small town where not much mail comes down the chute. Neither is it a good time to be a senior postmaster, since, come January 9th, postmasters around the country will be affected by a sweeping reduction in force (RIF). About half of the thousands projected to be on the chopping block are eligible, by federal rules, for some sort of retirement benefit, but others will simply be put out to pasture—in theory, to be replaced by much less expensive hourly workers, though the projected savings are fast being whittled down as various union arbitration scenarios play out, all of them likely to raise the cost of those workers.

A final bit of bad news for the US Postal Service comes from its reckoning that in fiscal year 2014, it lost $5.5 billion—news balanced to some extent by a $1.4 billion profit earned from sales and managing what in the parlance of Washington is called “controllable cost.”

There are silver linings in the thoroughgoing program of belt-tightening for private investors, for even further trimming is likely to occur after the new Republican-dominated, privatization-inclined Congress is seated. In this climate, we are likely to see a significant number of postal properties on the block.

As of 2012, the USPS, as the Wall Street Journal reports, “owned 197 million square feet of space in 8,606 buildings … and it leased an additional 81 million square feet across 24,000 properties. In the new wave of cost-cutting, many of those owned structures would be sold, and nationwide, more than 600 buildings have already been earmarked for sale.

In California, for example, the USPS has slotted a couple of dozen large facilities and numerous smaller ones for sale, part of a program that is intended to trim some $20 billion from operational costs in the next three years. One structure in downtown Los Angeles is on the market for $8.3 million, while two in Fresno are listed at a combined $2.9 million.

These sales are not without controversy. In Berkeley, the USPS has been attempting to sell its main facility for more than a year, an effort stymied by a lawsuit joined by the city government and the National Trust for Historic Preservation. The suit argues that the USPS has failed to observe federal historic preservation laws in establishing limits to the sale: a buyer, that is to say, will have to observe the laws affecting historic structures, not tear the old building down.

There is room, of course, under the preservation statutes for a buyer to make it over for uses such as condos—which is just happened in Modesto when the old post office there was converted to loft spaces. In just that way, outside California, the old downtown post office in Dallas, Texas, was converted into a luxury apartment building, while other post offices in Kansas and North Dakota have become office or commercial spaces.

A hearing on the Berkeley post office is scheduled to take place on December 11, and the outcome will be of interest to a broad audience well beyond the Bay Area. Meanwhile, a bill sponsored by Senators Tom Carper (D-Del.) and Tom Coburn (R.-Okla.) will grant the USPS relief from the burdensome retirement prepayment obligations that have hampered it for years, the source of a good part of that multibillion-dollar loss.

In exchange, however, USPS will be required to undertake such cost-saving measures as eliminating Saturday delivery and replacing house-by-house delivery with multiresidential curbside mailboxes. That bill faces considerable opposition, and at this writing there is substantial support within the lame-duck Senate for a general moratorium on postal closings and the sale of USPS buildings. All these matters are likely to be visited and revisited soon after the new congressional session begins.